In a nutshell; The fundamental goal of the Adwords PPC / PPI program is to direct surfers to the exact products and/or services that they are searching for quickly with highly targeted and relevant results. The more a keyword or phrase (terms) are found within an Ad, Landing Page and Path, the higher your adword score will be for that ad. The higher your score for any given ad the lower your cost per click (CPC) will be. The higher your click through rate (CTR) for any given ad the lower your CPC will become.

The whole idea behind this logic is that Google rewards advertisers who offer exactly what their ads and keyword phrases imply. By writing relevant, easy to understand and catchy ad copy which includes only those keywords (and relative phrases) targeting your product or service, you are creating a more positive experience for those who are searching for your products or services.
 
Most new advertisers will create their first adwords account and throw together an ad that is neither targeted nor well thought out. Maybe something like this;

Great Deals On "Product Name Here"
I sell these things at unbelievable
prices! Come see them all today!
www.mainpage.com

The biggest issue is that when a person signs up for the first time they are like deer in headlights. They'll have no clue to the processes and benefits of creating good ad copy with high relevance to the landing page. In most cases they will be hammered on the cost per click. They tend to direct every ad to the main page with little regard for the consequences of doing so. In general this ultimately leads to bleeding Adwords budgets. In severe cases you might have to blow the entire campaign away and start over (from scratch), just to get it healed. Always keep in mind that Adwords is an auction for placements and that you are bidding against others for that space within the keyword placement.

Starting with Adwords

- Go to https://adwords.google.com/select/starter/signup/ForkAuth and begin the signup process. 
- Choose "Standard Edition" (IMPORTANT)
- You can link your new Adwords account to an existing Google service or start with a new account.
- Follow the prompts and fill in your information.
- Choose POST PAY as your billing preference (IMPORTANT)
- Confirm your account.

The Basic Path to Setting Up a GOOD Adwords Campaign

1) Choose "New Online Campaign" and start with keywords. You'll probably be setting up multiple ad groups within this campaign so keep it simple, but avoid using Campaign #1 which is the Adwords default. Name your new campaign something descriptive that reflects the ad groups that it will contain. Now name your first ad group after the products and/or services that it will promote.

EXP: Lets say you are selling Jewelry and you want to begin by selling "Gold Rings". Name your campaign "Gold Rings" and then name the first ad group "Wedding Bands". This will be the ad group that you'll advertise gold wedding bands in. Later you'll be able to setup new ad groups within the "Gold Rings" campaign to promote different types of gold rings. You'll also be able to create additional ad campaigns to promote other types of jewelry such as chains, bracelets, necklaces and so on, but for now lets concentrate on your first campaign/ad group setup. 

2) Choose the audience that you will target. You will be offered a language (Your Home Language) choice and then relevant geo locations.  English US will bring up US and US/CANADA by default. By clicking on "Change Targets" you'll be presented options that will allow you to zero in on an audience as small as a zip code or as large as the entire world. Choose only the areas which you want to serve (IMPORTANT).

3) Ad Copy: Write a clear and concise ad that will tell the reader exactly what you are offering and why you'll be the best choice to buy from. Try not to fall into the "Crazy Gideon" realm of ad copy. You don't want to come off as if you are barking out "Come See! Get It Here! Right Now! Hurry!" The KISS rule works quite well in this situation. We'll be coming back to your ad copy later so keep it simple for the moment. It's a good idea to include the keywords you'll be targeting within your ad copy.  This will be an important step to a higher score. As I mentioned, we'll be coming back to this again so don't worry if it isn't exactly right on the first try.

4) Keyword Tool: Let's try to discover the keywords that are strong on your landing page. This is the page that your ad will target and not the visible url of the ad.  You'll be using the keyword tool to analyze this page only and this will be the target page for any of the ads that you create in this ad group. Be choosy about the keywords and phrases you'll use. Choose only the words that are actually searched, have low to moderate competition and are within your budget by the cost per click estimate. This isn't to say that you can't use keywords that are highly competitive, but you'll have more businesses targeting those words and driving up the cost per click.

Note: You don't need an Adwords account to use the external version of the Google Keyword Tool 


5) Set your daily budget to half of what you think you can afford to spend. Budgets are always set at the ad campaign level. If you think you'll be running several campaigns then your spending limits will rise with each new budget that you set. If you run three campaigns at $5 per day then you will have a budget of $15 per day total. You can raise or lower your limits at any time.

6) Once you've decided on your keywords you must set a cost per click or the price you are willing to pay when someone clicks on your ad.

You will be presented with 3 bid options:

Search Network: These ads run within the family of Google websites and include Google Search, You Tube, Blogger, Blogspot and as many as 500 other websites. Ads that run within the search network tend to be more targeted and bring in a higher quality of convertable traffic. Cost per click should be set higher for these placements.

Content Network: The vast network of independent publishers who run Adsense on their pages. Generally, these sites have a less targeted audience so you'll set your bid per click a bit lower. A good rule of thumb is to set the content network CPC at about 1/2 of the search network. 

Content Network Managed / Auto Bidding: - You can manage the cost per click on a word by word basis or use the bid tool to obtain the highest position available for your bid price automatically. As a rule I set the auto bidding lower and prefer to manage my bids. 
 
7) Complete the ad campaign setup and go have a cup of coffee. We need to let Google index your ads and keywords into their database.  This can take anywhere from 20 minutes to a few hours.

8) Getting the best cost per click:  Bring up your "Ad Group" and click the keywords tab. More than likely you'll see that your keywords are not running and have minimum top page requirements posted to them. Hover the pointer over the looking glass next to the keyword and see what Google says needs to be done to fix this. It will most likly be one or more a combination of poor quality score, landing page content, poor visible URL, poor keyword relevance, poor ad copy relevance, bid too low... etc.

Primary factors in scoring are a combination of keywords, ad copy, URL naming and to a minor extent landing page content. Click Through Rates (CTR) are a factor to raising quality score and lowering CPC, so from this perspective doing split tests on both the ads and landing pages can help to lower CPC be choosing the combination of ads and target pages that convert the best. Adwords keyword scores are as follows; 1-4 Poor, 5-6 Fair, 7-8 Good, 9-10 Great.  You should be able to acheive Good to Great on every keyword by using the tactics explained above. Make a few more changes and go have another cup of coffee, come back and repeat 7 and 8, doing it again and again until you've squeezed the most out of your quality score.  As you improve the relationship between ad copy, keywords and target URL the better quality scores will lower your cost per click.

Do not start raising your keyword bids until every keyword is at least a 6 in scoring or you'll be hammered for what Google perceives "will be" a poorly performing campaign. Remember, Google rewards relational value and punishes the poorly designed campaigns.

9) Start raising your keyword bids (keyword by keyword) until they start running in the top 10. I'm not one to play into the 1st page targets however there is some merit to paying for top 3 positioning if your budget can afford it.

Google ad placement:
Positions 1-3 Top Left horizontal above local business and organic listings
Positions 4-9to11 Right Column Vertical running the right side cloumn next to results
Positions 10to12-13 Bottom Left Horizontal run at the bottom left of the page under results

The hottest spot on a page is that top left area of the 1st page that opens in front of a surfer.  Just like the headlines of a newspaper people actually read the top of the page rather than scrolling down. Google knows this and has set part of the equation to a lower cost per click to include click through rates. If you have a low click through rate you will be penalized with a lower quality score and this will raise your cost per click. Paying a bit more to run your ads at the top of the page will help to raise click through rates.
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Warning: Be aware that certain niche markets are so competitive that even the top 10 positions may have cost per clicks raised to over $25. Legal, Medical and Insurance are some of the mainstream industries that have reached such bid levels. At some point, because the Google methodology uses an auction format, many key phrases will become saturated and stagnate. Evidence of this is becoming more noticeable as certain keyword phrases become "owned" by the top players in an industry effectively cornering the market by pricing-out all competition. 
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Once you've completed all of the above steps you'll want to track your ads progress daily against converted traffic (sales, inquiries, signups...etc) making more adjustments, continually improving quality score and lowering that cost. You'll be on your way to raising ROI in no time.
 

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